Voyager Chpt 11

[jscryptopia]

The estate determined a "claim value" based on your total crypto holdings on the Voyage exchange prior to claiming Chpt. 11. This is from my personal claim info page. 

"Your claim amount was calculated based on the U.S. dollar price of the crypto assets in your Voyager account as of July 5, 2022"

Now where it gets murky is that is your total claim value has NOT been received yet. The estate has already distributed roughly %30 percent of your total claim value back in kind but the remaining %70 is held pending future litigation with FTX etc. The initial %30 of your total claim value came back as crypto in kind but some crypto assets that were not supported in the estate liquidation where sold (on my behalf) and redistributed in the form of USDC stable coin the others were also sold (on my behalf) but came back in same form just less coins.

So two things to clarify. The coins that came back in kind there is loss meaning I have significantly less coins of that asset from the redistribution. The usdc stable coin that was retrieved for selling non supported assets by the estate is also a loss on total original value my cost basis. These issues to me seem like I should be able to claim these losses somehow. Where it gets confusing for me is the future distribution of any recoveries from chapt 11 will be in Fiat no more crypto and there is a sizable IF that even happens or they are able to win in court to fund future recoveries. 

I guess what I'm not sure is what do I use as my cost basis and can I claim these losses of the 30% I got back even though I didn't sell but the estate liquidated on my behalf. There are sizable losses here for everyone involved and would help greatly to offset any future capital gains. We have gotten back part of our claim the 30% so it should on '23 tax in some form I believe but not familiar with bankruptcy. I believe this is the first case of chapter 11 involving crypto also.

The total claim page gives quite a lot of info:

coin type held | 7/5 liquidation price | quantity | claim amount

Then the June 2023 in-kind distribution claim breaks down what you got back as:

coin type held | recovery price | Distributed in | Initital Recovery | Recovery value | Transferred | Transferred value.

[JM321]

I was also a Voyager customer, and I have the same question. Thanks for so thoroughly and clearly asking this.

[Cindy4]

Hi @jscryptopia  !

If you do receive a settlement statement from the bankruptcy proceedings you can calculate your capital loss/gain at that time.  The cost basis is the original purchase price plus any transaction fees. 

If the investment becomes completely worthless it would be a miscellaneous itemized deduction, which is currently disallowed under the Tax Cuts and Jobs Act.

Here is a good resource from the Taxpayer Advocate Service:

https://www.taxpayeradvocate.irs.gov/news/tas-tax-tip-when-can-you-deduct-digital-asset-investment-l...

Hope this helps!

Cindy

[JM321]

Hi @Cindy4 . I read the TAS link you provided. I'm still unclear about some things:

-As @jscryptopia  mentioned, in June 2023 we received a partial (about 30%) return of our crypto holdings, some in-kind, and some in USDC. What was returned was based on an equation that factored in the approx. 30%, as well as the price of the crypto on July 5, 2022. So in a sense Voyager "sold" our crypto holdings on our behalf, then paid us in crypto and USDC. So, then, how do we handle a) the in-kind crypto received, and b) the USDC received?

-It is possible we will receive further returns in fiat currency, but that is yet to be determined. How to handle this?

It seems we should be able to claim a loss for the approx. 30% for TY2023... Is this correct? And potential future returns would be dealt with in that tax year?

The challenge, for me anyway, is the "in-between" state of the Voyager bankruptcy and the fact that it is not finalized as I understand it. I don't believe there is a final "settlement statement" at this time.

Thank you.

[Cindy4]

Hi @JM321 !

If I'm understanding correctly, the Voyager Crypto was exchanged for USDC.  Possibly you have received a statement on that transaction? 

When crypto is exchanged, it's treated as a property sale with capital gains or losses.  The basis of what you received would be the fair market value the day you took ownership of it.  The basis of what you gave up would be your cost plus any fees related to purchasing it.  

Future dispositions may be treated as property sales if you receive fiat currency.  Again, your basis in what you gave up would be the cost plus any fees related to purchasing it.  

Overall capital gains and losses are netted on your tax return and losses can be carried forward and even used to offset up to $3,000 of ordinary income per year.

Hope this helps!

Cindy

[klhrabosky]

I am having the same problems with how to report these losses from the Voyager bankruptcy. What "type" of transaction do I record for the 30% I get back? And how do I claim the 70% lost in the bankruptcy proceedings.

For example: 

I was holding 2151.1 coins at the time of the bankruptcy. I only received 804.6 of these coins in the settlement (30%) which I then moved out and sold at a loss. How do I account for the 70% that was liquidated/taken from me, the full loss?

I have another new discussion thread on the technical problems with TT not properly uploading the CSV files for the transaction data. This is beyond frustrating!

[mesaboogieman]

I had the same issue and ended up utilizing Coinledger. Once I linked Coinledger to Voyager and imported all of my transactions, Coinledger produced the csv file. I was able to upload it to Turbo Tax without any issues.

[klhrabosky]

I did that. Coinledger let me export the raw transaction data. That's the data I used to create the CSV in the TurboTax template To get any other formats or reports from Coinledger, it require a $45 subscription. :(

Did you do it this way or did you pay to get more forms to download? Thanks!

[mesaboogieman]

Yep.. I paid the fee.. Honestly just got tired of worrying about how to do it and figured I'd take a chance on Coinledger. I'm just glad its done now.

[klhrabosky]

Which form did you download? Thanks so much. It's very aggravating that the TurboTax template isn't working!

[mesaboogieman]

I didn't have any reportable income so I only used the one for capital gains/losses. After you've paid, there's a section on the right side of the page that says 'Tax Report Downloads'.... I utilized the Tax Filing Software link and downloaded the csv file for Turbo Tax Online. Then just followed the instructions on how to upload to Turbo Tax: https://coinledger.io/blog/how-to-file-your-cryptocurrency-taxes-with-turbotax

[cvg1rlr]

So if I held USDC and got my payout in 2023 for the approx 30% distribution, until the bankruptcy is finalized and the money set aside for lawsuits/tied up in lawsuits, I'm not able to claim any loss?  Since my account at Voyager only held USDC, there is no loss for having to convert a different crypto to USDC to cash out.

I had not conversion loss so the IRS site it sounds like until the bankruptcy is 100% completed and closed out, I won't be able to include on my taxes.

From the IRS

"Although some digital assets lost a significant amount of their value during 2022, you cannot claim a loss from this decrease on your tax return until there is a closed and completed transaction, such as a sale or exchange. If your digital asset investment account is frozen or your digital assets are tied up in bankruptcy proceedings, you can’t claim a taxable loss because you don’t have a closed and completed transaction. Once your account has been unfrozen or the bankruptcy proceedings completed, you will have to reassess your situation. If your digital assets and your ownership of them have remained intact, and they have any value, then you don’t have a recognizable loss. If you received a settlement (regardless how small) from the bankruptcy proceedings in exchange for your digital assets, this is considered a sale and you should calculate your capital loss (or gain) on Form 8949 and report it on Schedule D (Form 1040) for the year you received the settlement. If you received nothing from the bankruptcy settlement, neither money nor your digital assets, then your digital asset investment may be considered worthless and different rules apply.  

[NaClDvDg]

This is very helpful, just got my amended filing done for Voyager's Ch11 

[DawnC]

See the link below for instructions for uploading CSV files to TurboTax.   

Uploading CSV files for Crypto transactions See #4 - If the data is from an unsupported source (Voyager), you will need to create your own compatible CSV file using their data.

@jimmytax828